TSX drops as energy rally falters, miners buck the trend

TORONTO (Reuters) - Canada’s main stock index fell on Monday as a broad decline led by industrial and oil and gas shares eclipsed a rise in mining stocks, which were helped by buoyant metal prices.

Shares in Restaurant Brands International Inc (QSR.TO), formed by Burger King’s takeover of Canadian coffee and doughnut chain Tim Hortons last year, fell 2.9 percent to C$49.14, reversing an earlier jump, after reporting quarterly financial results.

After rallying off a March trough, the Toronto Stock Exchange’s benchmark S&P/TSX composite index .GSPTSE has sputtered in recent sessions, and some investors wonder whether further weakness lies ahead.

“We’re heading into probably an intermediate correction,” said John Johnston, chief strategy officer at Davis-Rea. He defined that as a 10 percent decline over a couple of months. “The thing is running out of gas here.”

The index ended down 64.25 points, or 0.42 percent, at 15,344.08. Eight of its 10 main sectors fell.

The index had gained more than 5 percent between March 10 and Friday’s close.

“A lot of good news has been discounted. The news is not turning out to be as good as anticipated,” Johnston said. “I see a market pushing up to new highs on reduced momentum.”

Canadian National Railway Co (CNR.TO) and Canadian Pacific Railway Ltd (CP.TO) both gave up 1.6 percent, to C$C$79.27 and C$236.42 respectively.

Oil and gas stocks were off 0.8 percent as crude prices slipped. [O/R]

“The energy run that we’ve had is, in the very short term, banking up to tough levels on a technical front to be able to sustain itself on the upside,” said Sid Mokhtari, a market technician at CIBC World Markets.

Energy stocks have recovered by about 15 percent over the past month, after a precipitous fall in the second half of 2014.

Miners featured prominently among the index’s heavyweight gainers on Monday as prices for copper, nickel and iron ore rose on hopes for economic stimulus measures in major buyer China. Gold also rose ahead of a U.S. Federal Reserve meeting this week.